Charitable giving: Uncovering hidden benefits

| Print |  Email
Monday, May 01, 2006

by Greg Chaillé, president, Oregon Community Foundation

Whether your business has an established plan for charitable giving or is just getting started, it is important to know how much of the philanthropic contributions your business makes can be deducted for tax purposes.

It can be daunting to navigate the complex tax structure for charitable giving. For instance, because the IRS treats business expenses differently from charitable contributions, it is essential that you are precise about the deductions you claim.

The following information applicable to Oregon businesses is based on contributions made to 501(c)(3) corporations and does not cover all types of charitable giving.

Business Structure Who Receives Deduction Allowable Deduction
C corporation Corporation Up to 10% of a business’s pre-tax profit in the year of the donations. Contributions over 10% can be carried over for five years.
S corporation Individual owner(s) Up to 50% an of individual’s adjusted gross income in the year of the donations. There is usually a five-year carryover.
Partnership Individual owners Up to 50% of an individual’s adjusted gross income in the year of the donations. There is usually a five-year carryover.
Sole proprietorship Individual owner Up to 50% of an individual’s adjusted gross income in the year of the donations. There is usually a five-year carryover.


The next chart summarizes IRS regulations for deductions. For greater detail on the regulations that are specifically applicable to Oregon and your organization or business, you must consult your tax adviser.

Type of contribution Charitable deductions Business expenses
Direct cash donation Yes. However, if you receive any benefit in return, you must subtract the value of that benefit from the amount of your deduction. No.
Cash given to employees to donate to charities of their choice Yes. No.
Sponsorship Yes, if not directly related to business. Yes, if directly related to business.
Purchase of ad in nonprofit publication Yes, if you don’t expect to earn at least the cost of the ad as a result of its publication. Yes, if you expect to earn at least the cost of the ad as a result of its publication.
In-kind gifts of products Yes, for the value of your costs, not market value. However, inventory donations by C corporations to benefit the ill, the needy or infants, and gifts of scientific equipment used for research may be eligible for higher-value deductions. No. Be sure not to deduct your costs as both a business expense and a charitable contribution.
Depreciable property Yes. Fair market value less prior depreciation. No.
Stock Yes, of both C and S corporations. Deductions can be made for fair market value if held by the donor for more than one year. No.


— Greg Chaillé, president, Oregon Community Foundation, www.ocfl.org.
The Oregon Community Foundation offers advice on the tax benefits of setting up a business or family foundation and provides guidance for charitable giving.
 

More Articles

Flattery with Numbers

July/August 2015
Friday, July 10, 2015
BY JOE CORTRIGHT

The false promise of economic impact statements.


Read more...

The Backstory: Portland Youth Builders

The Latest
Wednesday, June 03, 2015
blog002 1BY JASON E. KAPLAN | STAFF PHOTOGRAPHER

As part of our green workplaces story, Oregon Business checked out a community service project undertaken by Portland Youth Builders, a nonprofit alternative high school. In partnership with Whole Foods, PYB built garden boxes for a Home Forward  housing site. Home Forward is a government agency that provides housing for low income residents and people with disabilities.


Read more...

6 key things to know about summer baseball in Oregon

The Latest
Friday, June 05, 2015
basedthumbBY JACOB PALMER | DIGITAL NEWS EDITOR

As temperatures in Oregon creep into the 90s this weekend, Oregonians' thoughts are turning to — summer baseball.


Read more...

Stemming the tide of money in politics

Linda Baker
Wednesday, June 10, 2015
 jeff-lang-2012-thumbBY LINDA BAKER

Jeff Lang and his wife Rae used to dole out campaign checks like candy.  “We were like alcoholics,” Lang says. ”We couldn’t just give a little.”


Read more...

House of Clarity

July/August 2015
Monday, July 13, 2015
BY JACOB PALMER

Holding a Power Lunch at Veritable Quandary in downtown Portland.


Read more...

Urban renewer

Linda Baker
Wednesday, June 24, 2015
UnknownBY LINDA BAKER   

One year after he was appointed chair of the Portland Development Commission, Tom Kelly talks about PDC's longevity, Neil Kelly's comeback and his new role as Portlandia landlord.


Read more...

Ranking the airlines that fly PDX

The Latest
Thursday, July 30, 2015
airlinesthumbBY JACOB PALMER | DIGITAL NEWS EDITOR

17 airlines make stops at Portland International Airport, but not all are not created equal when it comes to customer service.


Read more...
Oregon Business magazinetitle-sponsored-links-02
SPONSORED LINKS